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                             DEPARTMENT OF COMMERCE 
                           Foreign-Trade Zones Board 
             AGENCY: Foreign-Trade Zones Board, International Trade 
                           Administration, Commerce. 
 
                                15 CFR Part 400 
                    Foreign-Trade Zones in the United States 
 
                            [Docket No. 21222-0262] 
                                 RIN 0625-AA04 
 
                                  55 FR 48446 
 
                               November 20, 1990 
 
 
ACTION: Notice of proposed rulemaking; further amendments.  
 
 
SUMMARY: The Foreign-Trade Zones Board (the Board) invites public comment 
on amending the notice of proposed rulemaking published in the Federal 
Register on January 26, 1990 (55 FR 2760-2770). It is proposed that 15 CFR
part 400 be further amended by revising certain sections of the January 26 
proposed rule and by adding certain new provisions, including a new section
providing for the collection of user fees to cover the costs of processing
zone applications. The Board is asking for additional public comments on 
these proposed amendments to the proposed rule because the changes cover 
the sections that received most of the comments or that are of primary 
interest to the public.  
 
 
DATES: Comments must be received on or before January 9, 1991.  
 
 
ADDRESSES: Comments (original and 6 copies) are to be addressed to John 
J. Da Ponte, Jr., Executive Secretary, Foreign-Trade Zones Board, 
International Trade Administration, U.S. Department of Commerce, 
Pennsylvania Avenue and 14th Street, NW., room 4213, Washington, DC 20230.
(202) 377-2862.   FOR FURTHER INFORMATION CONTACT: Stephen J. Powell, 
Chief Counsel for Import Administration, room 3622, U.S. Department of 
Commerce, Pennsylvania Avenue and 14th Street, NW., Washington, DC 20230. 
(202) 377-8916. 
 
TEXT: SUPPLEMENTARY INFORMATION: 
 
 
Background 
 
   The following discussion includes a brief summary of the comments 
received pursuant to the January 26, 1990, notice of proposed rulemaking 
and an explanatory note regarding the sections proposed to be added or 
further revised:  
 
   1. Section 400.1(c). Several comments were received. Commenters objected
to the requirement that domestic goods would have to be placed in "zone 
restricted" status and be in a zone for "bona fide" Customs reasons in 
order to obtain the statutory exemption from state and local ad valorem 
taxes.  
 
   Revised @ 400.1(c). It is proposed that reference to the foregoing 
requirements be eliminated. In the case of domestic merchandise, the 
statute authorizing the exemption (Pub. L. 98-573, 10/30/84) limits the 
ad valorem tax exemption to such items placed in zones for export. The 
requirement that "zone restricted" status be elected in such cases would 
have facilitated enforcement, but it is not necessary. The legislative 
history makes it clear that the use of zones must be for bona fide Customs
reasons both with regard to foreign or domestic merchandise, so it is not 
necessary to restate this requirement in the regulations. 
 
   Also, it is proposed that the first two sentences of this paragraph be 
rewritten to further clarify the interrelationship of zone sites and 
Customs territory. 
 
   2. Section 400.21(b). Numerous comments were received in opposition to
the proposed restriction that would limit subzones to 35 statute miles 
from the outer limits of a Customs port of entry or one hour's driving 
time from the nearest Customs office. The opposition was strongest from 
parties in states with many communities long distances from ports of entry.
 
   Revised @ 400.21(b). It is proposed that the subzone locational 
restriction be eliminated in terms of geographic distances from ports of 
entry. The revised provision takes into account the fact that subzones are
single-user facilities for which Customs supervisory procedures can be 
tailored to provide reasonable Customs access (thus, "adjacency") 
irrespective of distance from ports of entry.  
 
   3. [New] Section 400.26(d). It is proposed that a new paragraph (d) be
added to @ 400.26 to extend its coverage of applications to formal requests
made to the Board for revisions to grants of authority. Because many 
grants now contain special restrictions, the Board has been receiving more
requests for revisions based on changed circumstances. 
 
   4. Section 400.27. A few comments were received calling for time tables 
for processing cases. Many additional comments generally expressed concern 
about the length of the processing time for applications. 
 
   Revised @ 400.27. It is proposed that this section be revised 
extensively to provide a time schedule based on the time allocated to 
various stages of the application process. The objective is to complete 
all cases within one year of formal filing, and to reach decisions on 
those cases not involving manufacturing within 10 months. The guidelines 
are not based on statutory requirements and therefore are directive, not 
mandatory, insofar as they apply to the Board.  
 
   The revision also provides more detail as to procedures at the various 
stages of processing. The period for public comment will normally close 
followed by a 15-day period limited to rebuttal comments. Unfavorable 
examiners reports would be considered "preliminary" reports, and applicants
would be given an opportunity to submit further evidence similar to 
practice under the current regulations. If new material is submitted, the 
record would be reopened for further public comment. 
 
   5. [New] Section 400.30. It is proposed to add a new section which 
adopts a uniform system of fees to cover the Department of Commerce's 
Foreign-Trade Zones staff costs for processing applications pursuant to 31
U.S.C. 9701, which provides that federal agencies should recover, to the 
extent possible, direct and indirect costs for activities which convey 
special benefits to recipients above and beyond those accruing to the 
public at large. Concurrence for such user fees was received by the 
Department of Commerce from OMB in connection with the FY 1991 budget 
package of the Department of Commerce.  
 
   The fees are based on the average staff cost attributable to the types
of applications listed. Applications account for some 80 percent of FTZ 
staff time. It is anticipated that applicants will pass on the costs of 
these fees to the parties involved in using zones and subzones. The 
question of collecting user fees to cover expenses incurred in regard to 
ongoing zone activity remains under consideration. 
 
   Checks for payment of the fees must be included with applications. 
Refunds will be made on those applications which do not pass the prefiling
review and are not formally filed. The outcome of the case does not affect
the requirement for payment. 
 
   6. Section 400.31. Numerous comments were received expressing concern 
that this section creates stricter standards for approval of manufacturing
activity than are statutorily required. Most commenters supported the 
delineation of criteria, but many considered the provision on policy too 
vague. The provision's threshold test was opposed by many, who contended 
that all manufacturing proposals should have the benefit of an economic 
evaluation, even where there are policy issues. Some commenters argued 
that the provisions referring to inverted tariff situations do not allow 
for consideration of the positive net economic effect that stems from 
production moves from overseas to the United States and import shifts from
finished products to components that are encouraged under zone procedures.
 
   Concern was also expressed that provisions relating to transplant 
operations and inverted tariffs might be inconsistent with U.S. GATT 
obligations and with U.S. policy relating to foreign direct investment.
 
   The provision on burden of proof was opposed by many as creating too 
great a burden by requiring applicants to establish both the positive side
of their cases and the absence of negative factors. 
 
   Concern was expressed about the effect of monitoring existing 
operations without cause. 
 
   Revised @ 400.31. It is proposed that the threshold provision 
(@ 400.31(b)) be revised to clarify the provisions on policy 
considerations, and to expand the scope of paragraph (iii) to include 
items subject to quantitative controls, and clarify the latter subsection 
to indicate that import displacement of components for finished products 
would be considered in evaluating whether the use of zone procedures will 
create imports, the purpose of paragraph (iii) as a threshold provision 
being to cover only situations where zone procedures are or would likely 
be the direct cause of new imports that would not otherwise occur.  
 
   Under @ 400.31(c) on methodology and evidence, it is proposed that 
paragraph (c) be revised to delete the separate headings (c)(2) "inverted 
tariffs" and (c)(3) "transplant manufacturing" because the paragraphs are 
subject to a construction that conflicts with the section's substantive 
coverage of inverted tariff situations and activity involving foreign 
investment. The clarification of the substantive provisions makes the two 
paragraphs unnecessary.  
 
   The provision on burden of proof (@ 400.31(c)(5)) is proposed to be 
revised to acknowledge that an applicant's evidentiary burden of proof 
should be to prove its side of the case, i.e., the public benefits that 
would result from approval. A distinction is made that reflects the 
current practice that subzone applicants must present evidence of a 
significant public benefit. All applicants are expected to submit evidence
in response to evidence of possible adverse effects. 
 
   The provision on monitoring and post-approval reviews is proposed to 
be revised to eliminate the indication that the review would occur as a 
public interest determination under @ 400.31. Reviews of ongoing 
operations are conducted under the Board's broad "public interest" 
mandate, though the factors enumerated in @ 400.31 would still apply.
 
   7. Section 400.33. Several commenters expressed opposition because the
section precludes Board consideration of special circumstances where items
subject to AD/CVD duties could otherwise escape such duties because they 
were transformed in third countries. There were also expressions of 
support for the provision, and a question was raised as to whether the 
provision covers items subject to affirmative preliminary determinations.
 
   Revised @ 400.33. Paragraphs (b)(2) and (b)(3) have been consolidated 
into a revised paragraph (b)(2) to clarify the fact that the new 
requirement applies to items that would be subject both to AD/CVD orders 
and affirmative preliminary determinations if entered for consumption. 
 
   8. Section 400.51. There were a few comments on this section on the 
need for more public hearings, particularly when U.S. industries might be
affected by zone proposals. 
 
   Revised @ 400.51. A new paragraph (b) has been proposed to provide for 
requests from interested parties for hearings. 
 
 
Comments 
 
   The period for the submission of comments will close January 9, 1991. 
All comments received during this period will be considered by the Board 
together with the comments submitted in response to the January 26, 1990, 
notice in developing the final regulations. Submissions (original and six 
copies) shall be in writing and shall not contain information of a 
proprietary nature, as they will be made available for public inspection 
and copying, with the exception of those submitted by other Federal 
agencies. 
 
   The public record concerning these regulations will be maintained in 
the International Trade Administration Freedom of Information Records 
Inspection Facility, room 4104, U.S. Department of Commerce, Pennsylvania 
Avenue and 14th Street, NW., Washington, DC 20230. Written public 
comments on file at the facility may be inspected and copied in accordance
with 15 CFR part 4.  
 
   Information about the inspection and copying of records at the facility
may be obtained from Patricia L. Sears, International Trade Administration
Freedom of Information Officer, at the above address or by calling 
(202) 377-3031. Regulatory Flexibility Act 
 
   The General Counsel of the Department of Commerce has certified to the 
Chief Counsel for Advocacy of the Small Business Administration that an 
initial regulatory flexibility analysis is not required and has not been 
prepared because these regulations will not have a significant economic 
impact on a substantial number of small entities pursuant to sections 603 
and 604 of title 5, United States Code, added by the Regulatory 
Flexibility Act (5 U.S.C. 601 et seq.). There are some 160 zone grantees 
and some 60 firms operating all or parts of zone facilities for grantees. 
Of some 2,100 firms using zones, about 600 use them on a full time basis. 
It is estimated that fewer than 100 small entities are included among the 
total firms using zones. The overall impact of the proposed rules should,
in any case, be favorable because they will reduce the present regulatory 
burden on these parties by clarifying and simplifying procedures. 
 
 
Executive Order 12291 
 
   This proposed rulemaking is not a major rule as defined in section 1(b)
of E.O. 12291, because it involves changes to existing regulations that 
are not likely to result in (1) an annual effect on the economy of $100 
million or more; (2) a major increase in costs or prices for consumers, 
individual industries, federal, state, or local government agencies, or 
geographic regions; or, (3) significant adverse effects on competition, 
employment, investment, productivity, innovation or on the ability of 
U.S.-based enterprises to compete with foreign-based enterprises in 
domestic or export markets.  
 
 
Executive Order 12612 
 
   This proposed rule does not contain policies with Federalism 
implications sufficient to warrant preparation of a Federalism assessment
under Executive Order 12612. 
 
 
Paperwork Reduction Act 
 
   This rule contains information collection activities subject to the 
Paperwork Reduction Act of 1980 (44 U.S.C. 3501 et seq.). It will impose 
no additional reporting or recordkeeping burden on the public. Existing 
requirements for zone applicants, grantees, operators, and users are 
simplified and there is an overall reduction of the burden on these 
parties, which are the ones mainly affected (OMB Control Nos. 0625-0139 
and 0625-0109). 
 
 
List of Subjects in 15 CFR Part 400 
 
   Administrative practice and procedure, Confidential business 
information, Customs duties and inspection, Foreign-trade zones, Harbors,
Imports, Reporting and recordkeeping requirements. 
 
   For the reasons set out in the preamble, it is proposed that the notice
of proposed rulemaking revising 15 CFR part 400 that appeared on January 
26, 1990 (55 FR 2760-2770) be amended as follows: 
 
   PART 400 -- REGULATIONS OF THE FOREIGN-TRADE ZONES BOARD  
 
   1. The authority citation continues to read as follows:  
 
   Authority: Foreign-Trade Zones Act of June 18, 1934, (Pub. L. 397, 73rd
Congress; 48 Stat. 998-1003; 19 U.S.C. 81a-81u), as amended by Pub. L. 566,
81st Congress, approved June 17, 1950, (64 Stat. 246); Pub. L. 791, 85th 
Congress, approved August 28, 1958 (72 Stat. 945); Pub. L. 98-573, 98th 
Cong., Sec. 231, approved October 30, 1984 (98 Stat. 2991); and, Pub. L. 
99-386, 99th Congress, approved August 22, 1986. 
 
   2. Section 400.1, as proposed January 26, 1990 (55 FR 2763) is further
amended by revising paragraph (c) to read as follows: 
 
   @ 400.1 Scope. 
 
 
* * * * * 
 
   (c) To the extent "activated" under Customs procedures in 19 CFR part 
146, and only for the limited purposes specified in the Act (19 U.S.C. 
81(c)), zones are treated for purposes of the tariff laws and Customs 
entry procedures as being outside the Customs territory of the United 
States. Articles admitted into zones for purposes not specified in the 
Act, including articles consumed within zones, shall be subject to the 
tariff laws and regular entry procedures, including the payment of 
applicable duties, taxes, and fees (see, Nissan Motor Mfg. Corp. v. 
United States, 884 F. 2d. 1375 (CAFC 1989). Under zone procedures, 
foreign and domestic merchandise may be admitted into zones for operations
such as storage, exhibition, assembly, manufacture and processing, without
being subject to formal Customs entry procedures and payment of duties, 
unless and until the foreign merchandise enters Customs territory for 
domestic consumption. At that time, the importer ordinarily has a choice 
of paying duties either at the rate applicable to the foreign material in 
its condition as admitted into a zone, or if used in manufacturing or 
processing, to the emerging product. Quota restrictions do not normally 
apply to foreign goods in zones, but the Board can limit or deny zone use 
in specific cases on public interest grounds. Merchandise moved into 
zones for export (zone-restricted status) may be considered exported for 
purposes such as federal excise tax rebates and Customs drawback. Foreign 
merchandise (tangible personal property) admitted to a zone and domestic 
merchandise held in a zone for exportation are exempt from state and 
local ad valorem taxes (19 U.S.C. 810(e). 
 
   3. Section 400.21, as proposed January 26, 1990 (55 FR 2764), is 
further amended by revising paragraphs (b) to read as follows: 
 
   @ 400.21 Number and location of zones and subzones. 
 
 
* * * * * 
 
   (b) Location of zones and subzones -- port of entry adjacency 
requirements. (1) The Act provides that the Board may approve "zones in 
or adjacent to ports of entry" (19 U.S.C. @ 81b). 
 
   (2) The "adjacency" requirement is satisfied if: 
 
   (i) A general-purpose zone is located within 35 statute miles from 
the outer limits of a port of entry. 
 
   (ii) A subzone meets the following requirements relating to Customs 
supervision: 
 
   (A) Proper Customs oversight can be accomplished with physical and 
electronic means; and, 
 
   (B) All electronically produced records are maintained in a machine-
sensible format for the duration of the record period; and, 
 
   (C) The grantee/operator agrees to present merchandise for examination
at a Customs site selected by Customs when requested, and further agrees to
present all necessary documents directly to the Customs oversight office.  
 
   4. Section 400.26, as proposed January 26, 1990 (55 FR 2766), is further
amended by adding a new paragraph (d) to read as follows:  
 
   @ 400.26 Application for expansion or other modification to zone 
project.  
 
 
* * * * * 
 
   (d) Applications for other revisions to grants of authority. 
Applications or requests for revisions to grants of authority, such as 
restriction modifications, shall be submitted in letter form with 
information and documentation necessary for analysis, as determined by the 
Executive Secretary. If the change involves removal or significant 
modification of a restriction included by the Board in a grant of 
authority, the review procedures of @ 400.32 shall apply. If not, the 
procedure set forth in @ 400.27(f) shall apply.  
 
   5. Section 400.27, as proposed January 26, 1990 (55 FR 2766), is 
revised to read as follows: 
 
   @ 400.27 Procedure for reviewing and processing applications.  
 
   (a) In general. This section outlines the procedure followed in 
processing applications submitted under @@ 400.24-400.26. In addition, it 
sets forth the time schedules which will normally be applied in processing
applications. The schedules will provide guidance to applicants with 
respect to the time frames for each of the procedural steps involved in 
the Board's review. Under these schedules, applications involving 
manufacturing would be processed within 1 year, and those not involving 
manufacturing, within 10 months. While the schedules will normally be 
adhered to, the Board may determine that special circumstances may warrant
additional time, such as when the public comment period must be reopened 
pursuant to paragraphs (d)(2)(v)(B) and (d)(3)(vi)(B) of this section. 
 
   (b) Prefiling review. Applications shall be accompanied with a check in 
accordance with @ 400.30, and will be dated upon receipt at the 
headquarters of the Board. The Executive Secretary will determine whether 
the application satisfies the requirements of @@ 400.24, 400.25, or 
400.26 and other applicable provisions of this part. 
 
   (1) If the application is deficient, the Executive Secretary will 
notify the applicant within 20 days of receipt of the application, 
specifying the deficiencies. The applicant shall correct the deficiencies
and submit the corrected application within 30 days of notification. 
Otherwise the application (original) will be returned. 
 
   (2) If the application is sufficient, the Executive Secretary will 
within 45 days of receipt of the application: 
 
   (i) Formally file the application, thereby initiating the proceeding 
or review; 
 
   (ii) Assign a case docket number in cases requiring a Board order; and 
 
   (iii) Notify the applicant. 
 
   (c) Procedure -- Executive Secretary responsibilities. After initiating
a proceeding based on an application under @@ 400.24, 400.25, or 
400.26(b), the Executive Secretary within 15 days will: 
 
   (1) Designate an examiner to conduct a review and prepare a report with
recommendations for the Board; 
 
   (2) Publish in the Federal Register a notice of the formal filing of 
the application and initiation of the review which includes the name of 
the applicant, a description of the zone project, information as to any 
hearing scheduled at the outset, and an invitation for public comment, 
including a time period during which the public may submit evidence, 
factual information, and written arguments. Normally, the comment period 
will close 60 days after the date the notice appears, except that if a 
hearing is held (see, @ 400.51) the period shall not close prior to 15 
days after the date of the hearing. The closing date for general comment 
will ordinarily be followed by an additional 15-day period for 
rebuttal comments; 
 
   (3) Send copies of the filing and initiation notice and the 
application to:  
 
   (i) The Commissioner of Customs and the Regional Commissioner, or a 
designee; and 
 
   (ii) The Resident Member, Board of Engineers for Rivers and Harbors, 
Department of the Army, and the District Engineer; 
 
   (4) Arrange for hearings, as appropriate; 
 
   (5) Transmit the reports and recommendations of the examiner and of the 
officials identified in paragraph (c)(3) of this section to the Board for 
appropriate action; and 
 
   (6) Notify the applicant in writing and publish notice in the Federal 
Register of the Board's determination. 
 
   (d) Case reviews -- procedure and time schedule -- (1) Customs and army 
engineer review. The Regional Commissioner (Customs), or a designee, and 
the District Engineer (Army), in accordance with the regulations and 
directives of their respective agencies, will submit their technical 
reports to the Executive Secretary within 45 days of the conclusion of 
the public comment period described in paragraph (c)(2) of this section. 
 
   (2) Examiners reviews -- non-manufacturing. Examiners assigned to cases 
not involving manufacturing activity shall conduct a review taking into 
account the factors enumerated in @ 400.23 and other appropriate sections 
of this part, which shall include: 
 
   (i) Conducting or participating in necessary hearings scheduled by the 
Executive Secretary; 
 
   (ii) Reviewing case records, including public comments;  
 
   (iii) Requesting information and evidence from parties of record;  
 
   (iv) Developing information and evidence necessary for evaluation and 
analysis of the application in accordance with the criteria of the Act 
and regulations; 
 
   (v) Preparing a report with recommendations to the Board and 
submitting it to the Executive Secretary within 120 days of the close of 
the period for public comment (see, paragraph (c)(2) of this section). 
 
   (A) If the report is unfavorable to the applicant, it shall be 
considered a preliminary report and the applicant shall be notified within
5 days (in writing or by phone) and given 30 days from the date of 
notification in which to respond to the report and submit additional 
evidence. 
 
   (B) If the response contains new evidence on which there has not been 
an opportunity for public comment, the Executive Secretary will publish 
notice in the Federal Register within 10 days after completion of the 
review of the response. The new material will be made available for 
public inspection and the Federal Register notice will invite further 
public comment for 30 days, with an additional 15-day period for rebuttal 
comments. 
 
   (C) The Customs and District Engineer (Army) advisers shall be notified
when necessary for their further comments, which shall be submitted within
45 days after their notification. 
 
   (D) The examiners report in situations under paragraph (d)(2)(v)(A) of 
this section shall be completed and submitted to the Executive Secretary 
within 30 days after receipt of additional evidence or notice from the 
applicant that there will be none; except that, if paragraph (d)(2)(v)(B) 
of this section applies, the report will be submitted within 30 days of 
the close of the period for public comment. 
 
   (3) Examiners reviews -- cases involving manufacturing. Examiners shall
conduct a review taking into account the factors enumerated in @ 400.23, 
@ 400.31, and other appropriate sections of this part, which shall include:
 
   (i) Conducting or participating in hearings scheduled by the Executive 
Secretary; 
 
   (ii) Reviewing case records, including public comments;  
 
   (iii) Requesting information and evidence from parties of record;  
 
   (iv) Developing information and evidence necessary for analysis of the 
threshold factors and the economic factors enumerated in @ 400.31;  
 
   (v) Conducting an analysis to include: 
 
   (A) An evaluation of policy considerations pursuant to @@ 400.31(b)(1)
(i)and 400.31(b)(1)(ii); 
 
   (B) An evaluation of the economic factors enumerated in @@ 
400.31(b)(1)(iii) and 400.31(b)(2), which shall include: An evaluation of 
the economic impact on domestic industry, which includes both producers 
of like products and producers of components/materials used in the 
manufacture and assembly of the products. The evaluation will take into 
account such factors as market conditions, price sensitivity, degree and 
nature of foreign competition, effect on exports and imports, and the net 
effect on U.S. employment; 
 
   (vi) Conducting appropriate industry surveys, using questionnaires when
necessary; and 
 
   (vii) Preparing a report with recommendations to the Board and 
submitting it to the Executive Secretary within 150 days of the close of 
the period for public comment: 
 
   (A) If the report is unfavorable to the applicant, it shall be 
considered a preliminary report and the applicant shall be notified within
5 days (in writing or by phone) and given 45 days from the date of 
notification in which to respond to the report and submit additional 
evidence. 
 
   (B) If the response contains new evidence on which there has not been an
opportunity for public comment, the Executive Secretary will publish notice
in the Federal Register within 10 days after completion of the review of 
the response. The new material will be made available for public 
inspection and the Federal Register notice will invite further public 
comment for 30 days, with an additional 15-day period for rebuttal 
comments. 
 
   (e) Procedure -- Completion of review. (1) After the examiners report 
with recommendations is completed and submitted to the Executive Secretary,
within 15 days, the latter will circulate the report to Board members for 
their review and votes (by resolution). 
 
   (2) The Treasury and Army Board members will return their votes to the 
Executive Secretary within 30 days, unless a formal meeting is requested 
(see, @ 400.11(d)). 
 
   (3) The Commerce Department will complete the decision process within 15
days of receiving the votes of both other Board members, and the Executive 
Secretary will publish the Board decision. 
 
   (f) Procedure -- Application for minor modification of zone project. 
(1) The Executive Secretary will make a determination in cases under @ 
400.26(c) involving minor changes to zone projects that do not require a 
Board order, such as boundary modifications, including certain 
relocations, and will notify the applicant in writing of the decision 
within 30 days of the determination that the application or request can 
be processed under @ 400.26(c).  
 
   (2) The concurrence of the District Director is required for approvals
under paragraph (d)(1) of this section, and the District Director shall 
provide his decision within 20 days after being notified of the request 
or application.  
 
   6. Subpart C, as proposed January 26, 1990 (55 FR 2764), is further 
amended by adding a new @ 400.30 to read as follows: 
 
   Subpart C -- Establishment and Modification of Zone Projects  
 
   @ 400.30 Application fees. 
 
   (a) In general. This section sets forth a uniform system of charges in
the form of fees to cover the direct and indirect costs incurred by the 
Foreign-Trade Zones staff of the Department of Commerce for processing 
applications under this part. The legal authority for the fees is 31 
U.S.C. 9701, which provides for the collection of user fees by agencies of 
the Federal Government. 
 
   (b) Uniform system of user fee charges. The following graduated fee 
schedule establishes fees for various types of applications and requests 
for authority based on their average processing time. Applications 
combining requests for more than one type of approval are subject to the 
fee for each category.  
 
 
(1) New general-purpose zones: 
 
 
(i) First zone in POE area (@ 400.24; @ 400.21(a)(1)(i)) . . . $2,850  
 
 
(ii) Additional zones (@ 400.24; @ 400.21(a)(2)) . . . $3,240  
 
 
(2) Special-purpose subzones (@ 400.25) . . . $6,510 
 
 
(3) Expansions (@ 400.26(b)) . . . $1,630 
 
 
(4) Manufacturing reviews: 
 
 
(i) Formal (@ 400.32) . . . $4,670 
 
 
(ii) Administrative (@ 400.32(b)(1)) . . . $1,230 
 
 
(5) Boundary modifications (@ 400.26(c)) . . . $330 
 
   (c) Applications submitted to the Board shall include a check drawn on 
a national or state bank or trust company of the United States or Puerto 
Rico in the amount called for in paragraph (b) of this section. 
Uncertified checks must be acceptable for deposit by a Federal Reserve 
bank or branch.  
 
   (d) Applicants shall make their checks payable to the U.S. Department 
of Commerce ITA. The checks will be deposited by ITA into the Treasury 
receipts account. If applications are found deficient under @ 400.27(b)(1),
or withdrawn by applicants prior to formal filing, refunds will be made.
 
   7. Section 400.31, as proposed January 26, 1990 (55 FR 2767), is 
revised to read as follows: 
 
   @ 400.31 Manufacturing operations; criteria. 
 
   (a) In general. Pursuant to section 15(c) of the Act (19 U.S.C. 
81o(c)), the Board has authority to restrict or prohibit zone activity 
"that in its judgment is detrimental to the public interest." In 
evaluating zone and subzone manufacturing activity, either as proposed in 
an application or as part of a review of an ongoing operation, the Board 
shall determine whether the activity in question is in the public interest
by reviewing the evaluation criteria contained in paragraph (b) of this 
section. Such a review involves consideration of whether the activity is 
consistent with trade policy and programs, and whether its net economic 
effect is positive. 
 
   (b) Evaluation criteria. -- (1) Threshold factors. It is the policy of 
the Board to authorize zone activity only when it is consistent with 
public policy and does not encourage net imports. Thus, before authorizing
proposed manufacturing activity or in its review of ongoing manufacturing,
the Board shall determine that: 
 
   (i) The activity is not inconsistent with U.S. trade and tariff law, or
policy which has been formally adopted by the Executive branch;  
 
   (ii) The use of zone procedures would not likely diminish the 
effectiveness of a U.S. international trade policy initiative or program; 
and  
 
   (iii) If the activity involves items subject to quantitative import 
controls or inverted tariffs, that the use of zone procedures would not 
or has not directly resulted in imports that, but for the use of zone 
procedures, would not likely otherwise have occurred, taking into account 
imports both as individual items and as components of imported products.
 
   (2) Economic factors. After its review of threshold factors, if there
is a basis for further consideration, the Board shall consider the 
following factors in determining the net economic effect of the activity 
or proposed activity:  
 
   (i) Overall employment impact; 
 
   (ii) Exports and reexports; 
 
   (iii) Retention or creation of manufacturing activity;  
 
   (iv) Extent of value-added activity; 
 
   (v) Overall effect on import levels of relevant products;  
 
   (vi) Extent and nature of foreign competition in relevant products;  
 
   (vii) Impact on related domestic industry, taking into account market 
conditions; and 
 
   (viii) Other relevant information relating to net economic impact and 
public interest considerations. 
 
   (c) Methodology and evidence -- (1) The first phase (@ 400.31(b)(1)) 
involves consideration of threshold factors. If an examiner makes a 
negative finding on any of the factors in @ 400.31(b)(1) in the course of 
a review, the applicant shall be informed and have an opportunity to amend
its application within 30 days. If the Board determines any of the @ 
400.31(b)(1) factors in the negative, it shall deny or restrict authority 
for the proposed or ongoing activity.  
 
   (2) Contributory effect. In assessing the significance of zone 
operations as part of the consideration of economic factors, the Board 
may consider the contributory effect zone savings have as an incremental 
part of cost effectiveness programs adopted by companies to improve their 
international competitiveness. 
 
   (3) Burden of proof. Applicants for subzones shall have the burden of 
proof of establishing that the activity does or would result in a 
significant public benefit. Applicants for approval of manufacturing in 
general-purpose zones shall submit evidence regarding the positive 
economic effects that would result from activity within the zone. Both 
types of applicants are expected to submit evidence in response to 
evidence of adverse economic effects during the public comment period. 
 
   (d) Monitoring and post-approval reviews -- (1) Approved manufacturing 
activity remains subject to review under this section at any time.  
 
   (2) Reviews may be initiated by the Board, or they may be undertaken in
response to requests from interested parties showing good cause.  
 
   (3) Upon review, if the Board finds that zone activity is no longer in 
the public interest, it may suspend subzone status or restrict the 
activity in question. 
 
   8. Section 400.33, as proposed January 26, 1990 (55 FR 2768), is further
amended by revising paragraph (b) to read as follows: 
 
   @ 400.33 Restrictions on manufacturing activity. 
 
   (a) * * * 
 
   (b) Restriction on items subject to antidumping and countervailing duty 
actions -- (1) Board policy. Zone procedures shall not be used to 
circumvent antidumping (AD) and countervailing duty (CVD) actions under 
19 CFR parts 353 and 355. 
 
   (2) Admission of items subject to AD/CVD actions. Items subject to 
AD/CVD orders or items which would be subject to suspension of liquidation
under AD/CVD procedures, if they entered U.S. Customs territory, shall be 
placed in privileged foreign status (19 CFR 146.41) upon admission to a 
zone or subzone. Upon entry for consumption, such items shall be subject 
to duties under AD/CVD orders or to suspension of liquidation, as 
appropriate, under 19 CFR parts 353 and 355. 
 
   9. Section 400.51, as proposed January 26, 1990 (55 FR 2770), is 
revised to read as follows: 
 
   @ 400.51 Hearings. 
 
   (a) In general. The Board, the Secretary, or the Executive Secretary, 
as appropriate, may schedule and/or hold hearings during any proceedings or
reviews conducted under this part whenever necessary or appropriate.  
 
   (b) Requests for hearings -- (1) An interested party may request a 
hearing during a proceeding or review. 
 
   (2) The request must be made within 30 days of the beginning of the 
period for public comment (see @ 400.27) and must be accompanied by 
information establishing the need for the hearing and the basis for the 
requesting party's interest in the matter. 
 
   (3) A determination as to the need for the hearing will be made by 
the Assistant Secretary within 15 days after the receipt of such a request.
 
   (c) Procedure for public hearings. The Board will publish notice in the 
Federal Register of the date, time and location of a hearing. All 
participants shall have the opportunity to make a presentation. 
Applicants and their witnesses shall ordinarily appear first. The 
presiding officer may adopt time limits for individual presentations. 
 
   Dated: October 9, 1990. 
 
 
Eric I. Garfinkel, 
 
   Assistant Secretary for Import Administration, Chairman, Committee of
Alternates, Foreign-Trade Zones Board.   
[FR Doc. 90-27210 Filed 11-19-90; 8:45 am] 
 
   BILLING CODE 3510-DS-M